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Emails Exchanged Between Counsel Construed As Written Modifications of Arbitration Agreement

In T & Beer, Inc. v. Wine Source Selections, LLC , 2012 WL 360286 (N.J. Super. February 6, 2012), unpublished, Plaintiff was engaged in the wholesale distribution of beer and wine, primarily in New York and New Jersey. Defendant was a supplier and importer of wine and other alcoholic beverages. Under the Agreement, defendant agreed to sell to plaintiff, as a distributor, the products listed in the Agreement’s appendix in New York and New Jersey “on an exclusive basis.” The Agreement provided for arbitration of all disputes between the parties and written modification of any terms of the agreement.

Plaintiff claimed that contrary to the terms of the Agreement, other retailers and wholesale distributors were distributing products in New York and New Jersey that were subject to its exclusive distributorship with defendant. Plaintiff, in accordance with the Agreement, demanded arbitration. Arbitration did not immediately occur. Instead, through their respective attorneys, the parties engaged in negotiations, which were memorialized in a series of emails exchanged between counsel. In one such email from defense counsel dated September 24, 2010, defense counsel consented to having the claims asserted by T & Beer removed from arbitration and heard in the Superior Court. Defense counsel also consented to personal jurisdiction. In addition, defense counsel agreed to accept service of the “Summons and Complaint via regular mail and/or email.”

On October 11, 2010, plaintiff filed a verified complaint for injunctive relief to enforce the restrictive covenant contained in the Agreement and for reformation of the Agreement. Four days later, the court issued an order to show cause with temporary restraints temporarily restraining defendants from acting in “concert with any person or entity to distribute or sell any of the products” subject to the Agreement. On February 10, 2011, the court issued a preliminary injunction in favor of plaintiff.

On March 2, 2011, defendant filed a motion to dismiss plaintiff’s complaint. In support of the motion, defendant’s CEO submitted a certification stating that any disputes involving the Agreement were subject to arbitration and that Wine Source “never agreed to have any disputes arising out of the Distribution Agreement to be decided by this [c]ourt.” Plaintiff opposed the motion, arguing that defendant, through its attorney, “consistently represented to this [c]ourt … that this matter is properly before the [c]ourt and that they submit to the jurisdiction of this [c]ourt” and “have waived submitting this matter to arbitration.”

The trial court found no such waiver. The court acknowledged that stipulations by attorneys and their clients before the court are enforceable. Nonetheless, the court reasoned that given the explicit language of the Agreement that “[n]o modification or waiver of any provision of this Agreement shall be effective unless in writing and signed by the parties,” the absence of a document executed between the parties explicitly waiving arbitration did not preclude defendant from “now seeking enforcement of the arbitration provision.” The present appeal followed.

The appeals court concluded, as did the trial court, that the Agreement expressly and unequivocally calls for arbitration of disputes between the parties and written modification of any of the terms of the Agreement. The court disagreed, however, with the trial court’s conclusion that there was no written modification of the arbitration provisions. The court was persuaded that the emails sent in September of 2010 satisfied the requirement that any modification of the terms of the agreement must be in writing and signed by the parties. Moreover, the court found that the parties’ actions thereafter clearly and convincingly represented additional evidence demonstrating defendant’s knowing and voluntary waiver of the arbitration provisions contained in the Agreement.

Thomas Paschos – practices in the fields of professional liability, employment litigation, products liability, and insurance coverage. He has represented, amongst others, corporate officers, defendants in RICO actions, physicians, dentists, nursing homes, lawyers, accountants, product manufacturers, leasing companies, insurance agents and brokers, home inspectors, contractors, and insurance companies. He has been awarded an AV rating by Martindale – Hubbell, which identifies a lawyer with a very high to preeminent legal ability. In 2004, he was voted by his peers as one of Pennsylvania’s Super Lawyers. Contact Tom at (215) 636-0555 or TPaschos@paschoslaw.com